9.4 Strategic Objectives and Levels of Strategy

Strategic objectives guide companies towards their long-term goals. They break down the mission into actionable targets, like increasing market share or expanding globally. These objectives help align activities and decision-making across the organization.

Companies employ different levels of strategy to achieve their objectives. Business-level strategies focus on competing within specific markets, while corporate-level strategies address the overall direction. International strategies manage operations across multiple countries, balancing global efficiency with local responsiveness.

Strategic Objectives and Levels of Strategy

Role of strategic objectives

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• Provide specific, measurable goals aligned with company's mission and vision to guide activities and decision-making
• Break down mission statement into actionable long-term goals (typically 3-5 years)
• Examples:
  • Increase market share by a certain percentage
  • Expand into new geographic markets (Asia, Europe)
  • Develop new products or services
  • Improve customer satisfaction ratings
  • Reduce costs or increase profitability
• Utilize balanced scorecard approach to track progress across multiple dimensions

Types of organizational strategies

• Business-level strategies determine how to compete within a specific industry or market
  • Focus on creating and sustaining competitive advantages
  • Examples: cost leadership, differentiation, focus strategies
• Corporate-level strategies address overall direction and scope of the organization
  • Involve decisions about entering, exiting, or maintaining businesses
  • Allocate resources among different business units
  • Examples: diversification, vertical integration, strategic alliances
• International strategies manage operations and competition in multiple countries
  • Decide which markets to enter, entry modes, and local adaptations
  • Examples: global standardization, localization, transnational strategies

Implementation of grand strategies

• Growth strategies increase company's size, market share, or profitability
  1. Business level: market penetration, product development, market development
  2. Corporate level: diversification into new businesses or markets
  3. International: enter new countries or expand in existing markets
• Stability strategies maintain company's current position and performance
  1. Business level: focus on existing products and markets
  2. Corporate level: maintain current business portfolio, allocate resources to support them
  3. International: consolidate operations in existing markets
• Defensive strategies address challenges or threats to performance
  1. Business level: cost cutting, asset reduction, retrenchment from certain markets
  2. Corporate level: divest underperforming businesses, restructure organization
  3. International: exit certain countries or scale back operations due to adverse conditions
• Choice of grand strategy depends on company's resources, competitive position, and external environment
  • Different strategies can be pursued at various organizational levels based on specific challenges and opportunities faced by each business unit or market
  • Analyze industry attractiveness using Porter's Five Forces model

Strategic Management Process

• Involves continuous cycle of planning, implementation, and evaluation
• Identify core competencies to leverage for competitive advantage
• Analyze value chain to optimize activities and create customer value
• Develop strategic planning process to align objectives with resources and capabilities